Question

A company needs funds to expand its business by purchasing new equipment. Which financial market should the company use to raise money

Answer 1

Answer:

Capital market

Explanation:

The capital market is an aspect of the financial market where long term capital is raised. Funds raised in this market can be in the form of,

• Equity capital: which grants fund providers an ownership stake in the company, the prospect of future dividends (when declared), and voting rights in the company.
• Debt capital: which entitles fund providers to regular interest payments usually a fixed rate of the fund provided.

The nature of project (long or short term) usually determine the market to access for funding. For short term funding, a company can access such in the Money Market where short term funding (usually with maturity of less than one year) are raised.